Markets opened strong this morning and continue to post gains. ADP jobs data was bad, ISM was bad, and yesterday's PMI was weak. But hey, China's GDP was OK so let's shoot for the moon again.
I have taken advantage of today's rally by releasing 2 Bear Call Credit Spreads on SPX, 1 spread in each of the
Trading Services. Strong rallies at the top of a trading range are a great time and place to deploy Bear Call Credit Spreads.
I am still very weary to get under this market with puts. I have taken flack about how I am missing the boat (and profits) with my lack of creating Iron Condors by issuing put spreads. This is not a market to get underneath. Bull put spreads under a market that defies gravity works.....until it doesn't. I have traded through way to many of these scenarios where things are great and everyone is lulled into a false sense of security. Then, you wake up to a down 30 S&P point day and everyone is "surprised"....and wiped out because their puts exploded. I say no thank you to that and good luck to those who wish to chase those trades.
The continued rally is threatening a couple of my current positions. The QQQ Bear Call Credit Spread is bleeding but with the Q's up >5% in 3 weeks, >7.4% in the last 30 days, at it's upper Bollinger Band (again), Williams%R and RSI screaming overbought on daily and weekly charts, and a large air pocket below the current price and the short term moving averages, I am comfortable to hold the position and wait for the pullback. Plus, more importantly, I can still roll the spread out for zero cost if more time is required for the pullback to occur.
My SPY & IWM Bear Put Debit Spreads are getting close but strong resistance lies between the market and the short strikes. The same circumstances as described above in the QQQ trade apply to the SPY & IWM as well. Therefore, all told, I am comfortable with them as well at this juncture.
We will see how the market closes today but the economic data to be released the next few days will be very interesting. I think we are setting up for some disappointments on jobs and retail sales. We'll see soon enough.....
